Card Range To Study

98 Cards in this Set

All authority that a principal expressly gives to an agent plus any authority that can reasonably be implied from the express grant

Agent

One (agent) who acts on behalf of another (principal)

Apparent Authority

Authority that a third party reasonaly believes an agent has based on the principal's holding the hange out as being the principal's agent.

Appraisal Rights

Shareholders who are dissatisfied with most fundamental corporate changes have an oppourtunity to dissent and demand that they corporation pay them the fair value of their shares rather than remain shareholders of a fundamentally changed corporation.

Articles of incorporation

Formation filing documents of a corporation and are filed with the state in which the business is located.

Articles of Organization

Formation filing documents of a Limited Liability Corporation.

Authorized Shares

Shares described in the articles

Business Judgement Rule

A director will not be liable to the corporation for acts performed or decisions made in good faith, in a manner the director believes to be in the best interest of the corporation, and with the care an ordinarily prudent person in a like position would exercise.

Bylaws

Contains the rules for running the corporation. They are not part of the articles of incorporation and are not required to be filed by the state.

C Corporation

A corporation that is taxed as an entity distinct from its owners.

Certificate of Authority

Authority granted by a state authorizing a foreign corporation to transact business within the state

Charging Order

Court order used by a creditor of an individual partner may obtain an interest against an individual partner's share of profits.

Closely held Corporation

The articles of incorporation can eliminate the board of directors and provide that they shareholders shall have the power of the board, but this is not typical expect in small corporations.

Common Stock

Class of stock that will carry with it all rights of stock ownership

Confessing a Judgement

Admitting liability in a lawsuit.

Consolidation

One or more corporations joining together to form a new corporation.

Corporate Opportunity Doctrine

If a director is presented witha business opportunity that would be of interest to his corporation, generaly the duty of loyalty prohibits the director from taking the opportunity himself.

Corporation

Legal entity distinct from its owners and managers. They are created by complying with a state incorporation statute.

Corporation by Estoppel

Under the estoppel doctrine, a party who treats a business as if it were a vaildy formed corporation will be estopped (legally barred) from claiming in a legal proceeding that the corporation was not validly formed. This applies to third parties who treat the business as a corporation as well as to the business itself

Cumulative Preferred Shares

Shares with a preference usually are entitled to a fixed amount of money before distributions can be made with respect to nonpreferred shares. With cumulative preferred shares, if a dividend

De Facto Corporation

If all the requirements for incorporation are not met, the business might still be treated as a corporation (and protect its owners, officers, and directors from personal liability). If the incorporators made a good faith attempt to incorporate, and operated as if they had incorporated, the business will be treated as a corporation in all respects, except the state may bring an action challenging the corporation's status.

De Jure Corporation

If all the requirements for incorporation are met, the corporation is said to be "de jure" and its existence will be recognized for all purposes

Debt Securities

Debt Securities are bonds. It represents a creditor-debtor relationship with the corporation whereby the corporation has borrowed funds from "outside investors" and promises to pay.

Derivative Action

When a corporation has a legal cause of action against someone but refuses to bring the action, the shareholders may have a right to bring a shareholder derivative action to enforce the corporation's rights. Such an action may be brought against the director of the corporation or outsiders.

Directors

Individuals with the general authority and responsibility for management of the corporation. In most corporations, the board of directors delegates the power to run the corporation on a day-to-day basis to the officers.

Dissociation

Change in the relationship of the partners caused by any partner ceasing to be associated in the carrying on of the business. The remaining partners have the right to continue the business.

Dissolution

Upon dissolution, the partnership is terminated and the business must be wound up

Dividends

Distribution of corporate profits as ordered by the directors and paid to the shareholders

Domestic Corporation

Corporation incorporated within the state

Equity Securities

Stocks - An instrument representing an investment in the corporation whereby its holder becomes a part owner of the business.

Fictitious Name Statutes

State laws that require persons conduction a business under an assumed name to file with the state the name under which the business is conducted and the real names and addresses of all person conducting the business

Fiduciary Duty

Duty of utmost loyalty and good faith owed by an agent to her principal

Foreign Corporation

Corporation doing business in a state other than its state of incorporation

Fundemental Changes

Issues that might fundamentally change the nature of the entity

General Partner

Person in either a general or limited partnership with unlimited personal liability and the right to take part in the management of the business.

Greenmail

When a corporation is faced with the prospect of being taken over and the BOD wants to resist the takeover attempt, it will pay the person or company attempting the takeover to abandon its takeover attempt

Incorporator

The party responsible for forming the corporation by filing articles of incorporation with the state.

Indemnification

Duty of a business entity to reimburse those properly acting on behalf of the entity for losses incurred.

An associate of persons with the intent of engaging in a single business venture for profit.

Limited Liablity (of shareholders, limited partners, and LLC members)

The creditors are prevented from accessing the personal assets of the individual. Their liability is limited to their investment in the entity.

Limited Liability Company (LLC)

Form of business entity that offers its owners (called members) one of the main advantages of the corporate form of business (ie they are not personally liable for the obligations of the company) and all of the tax advantages of a partnership. It is a hybrid business organization that combines characteristics of corporations, partnerships, and limited partnerships.

Limited Liability Partnership (LLP)

An association of 2 or more persons who agree to carry on as co-owners a business for profit. An LLP differs from a general partnership in that a partner in an LLP is not personally liable for the obligations or liabilities of the partnership arising from erros, omissions, negligence, malpractice, or the wrongful acts committed by another partner or by an employee, agent, or representative of the LLP. Neither are the partners liabile for partnership contracts.

Limited Partner

Partner with limited liability as to his personal assets, risking only his investment in the limited partnership. A limited partner is not an agent of the partnership.

Limited Partnership

A partnership made up of one or more general partners and one or more limited partners.

Locking up the Crown Jewels

When a corporation is face with the prospect of being taken over and the board of directors wants to resist the takeover attempt, it will give a third party an option to purchase the company's most valuable assets.

Members

Owners of a limited liability company.

Merger

Involves one or more corporations merging into another corporation. One corporation survives the merger and contiues in existence and the other merging corporations cease to exist following the merger.

Noncumulative Preferred Shares

Shares with a preferenced are usually entitled to a fixed amount of money before distributions can be made with respect to nonpreferred shares. Unless the dividend is cumulative the right to a dividend preference is extinguished if it is not declared for that year.

Officers

Parties elected by the board of directors to managed the corporation on a day-to-day basis. They are agents of the corporation.

Outstanding Shares

Shares in the shareholders hands

Par Value

Specific face value placed on stock

Piercing the Corporate Viel

In some circumstances, the courts will hould the shareholders, officers, or directors of a corporation liable because the legislative privilege of conducting business in corporate form is being abused.

Preemptive Rights

When a corporation proposes to issue additional shares of stock, current shareholders often want to purchase some shares in order to maintain their proportional voting strength through special rights referred to as "preemptive rights" that must be granted in the articles of incorporation

Preferred Stock

Ownership interest in a company that is preferred in some manner (dividends or assets) over the common stockholders in the case of liquidation.

Promoter

Individuals who form a coproation. Responsible for the procurement of commitments for capital that will be used by the corporation after formation. Promoters enter into contracts with third partiers who are interested in becoming shareholders and might also enter into contracts for goods or services to be provided to the corporation once its formed.

Proxy

Written authorization given to third parties for the purposes of voting shares on behalf of the shareholder.

Limited Liability Partnership (LLP)

An association of 2 or more persons who agree to carry on as co-owners a business for profit. An LLP differs from a general partnership in that a partner in an LLP is not personally liable for the obligations or liabilities of the partnership arising from erros, omissions, negligence, malpractice, or the wrongful acts committed by another partner or by an employee, agent, or representative of the LLP. Neither are the partners liabile for partnership contracts.

Limited Partner

Partner with limited liability as to his personal assets, risking only his investment in the limited partnership. A limited partner is not an agent of the partnership.

Limited Partnership

A partnership made up of one or more general partners and one or more limited partners.

Locking up the Crown Jewels

When a corporation is face with the prospect of being taken over and the board of directors wants to resist the takeover attempt, it will give a third party an option to purchase the company's most valuable assets.

Members

Owners of a limited liability company.

Merger

Involves one or more corporations merging into another corporation. One corporation survives the merger and contiues in existence and the other merging corporations cease to exist following the merger.

Noncumulative Preferred Shares

Shares with a preferenced are usually entitled to a fixed amount of money before distributions can be made with respect to nonpreferred shares. Unless the dividend is cumulative the right to a dividend preference is extinguished if it is not declared for that year.

Officers

Parties elected by the board of directors to managed the corporation on a day-to-day basis. They are agents of the corporation.

Outstanding Shares

Shares in the shareholders hands

Par Value

Specific face value placed on stock

Piercing the Corporate Viel

In some circumstances, the courts will hould the shareholders, officers, or directors of a corporation liable because the legislative privilege of conducting business in corporate form is being abused.

Preemptive Rights

When a corporation proposes to issue additional shares of stock, current shareholders often want to purchase some shares in order to maintain their proportional voting strength through special rights referred to as "preemptive rights" that must be granted in the articles of incorporation

Preferred Stock

Ownership interest in a company that is preferred in some manner (dividends or assets) over the common stockholders in the case of liquidation.

Promoter

Individuals who form a coproation. Responsible for the procurement of commitments for capital that will be used by the corporation after formation. Promoters enter into contracts with third partiers who are interested in becoming shareholders and might also enter into contracts for goods or services to be provided to the corporation once its formed.

Proxy

Written authorization given to third parties for the purposes of voting shares on behalf of the shareholder.

Quorum

Minimum number of parties that must be present for a valid vote or transaction

Registered Agent

The person on whom process may be served if the limited partnership, LLC, or corporation is sued.

Revised Model Business Corporation Act (RMBCA)

Uniform law governing corporations that has beed adopted by a slight majority of the states

Revised Uniform Limited Partnership Act (RULPA)

Uniform law governing limited partnerships that has been adopted by a majority of the states

Revised Uniform Partnership Act (RUPA)

Uniform law governing partnerships that has been adopted by a majority of the states

S Corporation

Corporation electing to be taxed like a partnership and yet retaining other advantages of the coporation form

Scorched Earth Policy

When a corporation is faced with the prospect of being taken over and the board of directors wants to resist the takeover attempt, it will sell off assets or take out loans that would make the company less financially attractive.

Self-Tender

When a corporation is faced with the prospect of being taken over and the board of directors wants to resist the takeover attempt, it will make an offer to acquire stock from its own stockholders and thus retain control in order to prevent a takeover.

Share Exchange

Transaction in which one corporation acquires of all outstanding shares of one or more classes of stock of another corporation. Both corporations continue to exist as separate entities.

Shareholder/Stockholder

Party owning an interest in a corporation. Has a limited right to manage.

Shark Repellant

When a corporation is faced with the prospect of being taken over and the board of directors wants to resist the takeover attempt, it will amend the articles of incorporation or bylaws to make a takeover more difficult.

Short-Form Merger

A merger whereby a parent corporation owning 90% or more of a subsidiary corporation may merge the subsidiary into the parent without the approval of the shareholders of either corporation or the approval of the subsidiary's board.

Sole Proprietorship

One person owns the business and manages all of its affairs. The sole proprietor is not considered an entity separate from the business.

Statement of Authority

Document filed with the secretary of state, stating that the partnership has expanded or curtailed a partner's authority to enter into transactions on behalf of the partnership. However, the filing of a limitation does not give third parties constructive knowledge of the limitation.

Statement of Denial

A partner listed in a filed statement of partnership authority may effectively deny her authority by filing a statement of denial with the secretary of state.

Stock Dividends

Dividends in the corporation's "own authorized but unissued shares"

Stock Subscriptions

Contracts committing parties to the purchase of stock.

Treasury Shares

Issued shares that are sometimes repurchased by the corporation (called "issued but not outstanding").

Ultra Vires Act

An unauthorized act. Under the RMBCA, a corporation may include a clause in its articles state the business purpose for which the corporation was formed. A number of states require a purpose clause. If a corporation undertakes business activities outside the clause (or outside the business permitted by statute) it is said to be acting "ultra vires" and may be challenged by adversely affected parties

Unlawful Distribution

A distribution that causes a corporation not to be able to pay its debts as they become due in the regular course of business or causes the corporation's total assets would be less than its total liabilities

Voting Agreements

Shareholders agree among themselves to vote their shares as the majority of signers directs

Voting Trusts

An agreement of shareholders under which all the shares owned by the parties to the agreement are transferred to a trustee, who votes the shares and distributes the dividends in accordance with the provisions of the voting trust agreement.

Watered Stock

Stock that is issued in exchange for property worth less than the par value of the stock (the difference between the par value and the value of the property is deemed to be "water")

White Knight

When a corporation is faced with the prospect of being taken over and the board of directors wants to resist the takeover attempt, it will find a company that the directors want to merge with.

Winding Up

Liquidation that involves the process of collecting the corporate or partnership assets, paying the expenses involved satisfying creditors' claims, and distributing the net assets of the business to the appropriate party.